Credit Department Best Practices: Develop a Risk Rating System

The RRS will help prioritize departmental focus, categorize outstanding accounts receivable (А/R) by risk rating levels and create a better data set for reviewing, sorting and decision-making. By doing this, you are laying the foundation for implementing the risk rating system across the company as...

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Bibliographic Details
Published in:Business Credit 2019-03, Vol.121 (3), p.24-27
Main Author: Ramey, Matthew
Format: Magazinearticle
Language:English
Subjects:
Accounts receivable
Aging
Automation
Best practices
Cash flow
Credit departments
Customers
Decision making
Ratings & rankings
Risk assessment
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Summary:The RRS will help prioritize departmental focus, categorize outstanding accounts receivable (А/R) by risk rating levels and create a better data set for reviewing, sorting and decision-making. By doing this, you are laying the foundation for implementing the risk rating system across the company as well as having your analysts keying on companies that are priorities. * А/R Aging: Assigning risk ratings on the aging report is one of the best things you can do when focusing on prioritization of А/R management, If this data is "sortable" on the aging report, then it becomes easier to make determinations on customer contacts via the assigned risk ratings. By utilizing a risk rating system, departments can quantify the "tribal knowledge" passed down and largely learned from experience into a numeric risk rating system that is easily understood across the organization, Matthew Ramey, CBA, CICP, spent 12 years in the credit management sector, beginning his career at CHS, Inc. and then the commodity trading firm, US Commodities, LLC. The RRS will help prioritize departmental focus, categorize outstanding accounts receivable (А/R) by risk rating levels and create a better data set for reviewing, sorting and decision-making, Assigning risk ratings on the aging report is one of the best things you can do when focusing on prioritization of А/R management.
ISSN:0897-0181